The People’s Potash?

By Andrew Stevens

Less than a week into December, Saskatoon-based Potash Corporation of Saskatchewan (PCS) announced that it would be cutting its workforce by about 18 percent. Over a thousand employees across the company’s North American operations will be laid off, with the most significant job losses hitting Saskatchewan. Around 440 workers will be left unemployed in PotashCorp’s home province. Workers at PCS mine sites were told about the downsizing through a televised broadcast of PotashCorp CEO, Bill Doyle. The CEO’s “Operating and Workforce Changes” message can be found on the company’s website. In his address, Doyle failed to point out that PCS had $555 million of cash on its balance sheet in the third quarter of 2013. Earnings for the same period reached $356 million, down from $645 million the previous year, but still the second highest nine-month cash flow from operating activities in company history. By restricting output and shutting down operations, PCS is working to inflate potash prices and increase profits, all on the backs of workers. potashcorp-lanigan-1-vb

At the company’s mine in Lanigan, located 120 kilometres east of Saskatoon, 300 workers were required to stand in a room to hear the news as they started their 6:30 AM shift on December 3. As Rick Suchy, president of Unifor Local 922, which represents 450 workers at the mine, recalls, “You went and stood in line like a cow to wait and get your head cut off”. Approximately 220 employees at the mine were laid off immediately. By the end of the year, potash production at PCS Lanigan will be suspended. Meanwhile, in New Brunswick, PotashCorp’s Penobsquis mine will cease production by the end of the first quarter, 2014. It appears that the PCS’s unionized workforce will bare the brunt of the job losses. So far, the Saskatchewan government’s formal response has been to organize a Rapid Response meeting on December 10 to help workers find new employment.

Saskatchewan’s “open for business” premier, Brad Wall, knows that the Sask Party’s political fortunes are closely tied to the well-being of potash and global commodity prices. Potash has been a politicized resource since at least the 1970s, when much of the industry was nationalized and turned into a Crown corporation – the Potash Corporation of Saskatchewan – by the NDP. From oil to shale gas to potash, resource extraction is an economic staple in Saskatchewan, even though direct employment is minimal. Less than 25,000 workers are employed in the primary commodity sector, or just 4 percent of the overall workforce. Yet, mining, quarrying, and oil and gas extraction account for over a quarter of Saskatchewan’s GDP. The service sector, however, is closely tied to the well-being resource-based employment, and these industries will certainly feel the sting of PCS’s downsizing. Small business owners who provide food and accommodation services in Lanigan also face an uncertain economic future. The construction industry might be equally affected as real estate development in the region cools or dies off completely. Such is the trickle down effect of this recent closure.

tin-thi-truong-phan-bon-3-2013In an attempt to play the role of populist, Wall surprised his critics by writing an open letter to PotashCorp Chairman, Dallas Howe, condemning the layoffs. “In the context of yesterday’s announcement,” Wall wrote, “this can only mean that the interests of shareholders were protected while the interests of employees here in Saskatchewan and elsewhere were sacrificed”. Wall continued with a stern, yet hollow, appeal on behalf of residents and workers. “I understand that PotashCorp’s Board of Directors and CEO need to look after the best interests of your shareholders. So do I. My shareholders are the people of Saskatchewan, who also happen to own the potash resource”. This is not the first time Wall has juggled his party’s ideological commitment to free market principles with political pragmatism.

My shareholders are the people of Saskatchewan, who also happen to own the potash resource – Premier Brad Wall

In 2010, the premier led a charge against the takeover of PotashCorp by Australian mining giant, BHP Billiton, which has invested billions of dollars into potash production in Saskatchewan. “Do we want to add PotashCorp to that list of once-proud Canadian companies that are now under foreign control?”, the premier proclaimed at the time. Wall gained considerable support for his determined opposition and ultimately the takeover bid fell apart. Of course, less was said about the fact that PCS’s Board of Directors was “insulted” by BHP’s low-ball offer of $130 per share at a time of near-record potash prices. Nor was there recognition that the real seat of power within PCS, according to some accounts, is situated in Chicago, not Saskatoon.

As in 2010, Wall and his business allies remain steadfast supporters of multinational resource companies. In fact, both the Saskatchewan Party and the NDP count energy and mining corporations as their leading financial contributors.  The premier’s most recent demand that “everyone shares in the sacrifice”, shareholders as well as workers, is meaningless considering the generous royalty and tax regime companies like PCS currently enjoy. This follows a pro-business model spearheaded by the NDP in early 2000s, which has set the royalty rate for primary commodities at world record lows. Calls for tax hikes and higher royalties, as a response to the recent layoffs, were quickly rebuked by the premier who wished to maintain the pro-business status quo. To this point Wall has preferred to focus on “shared sacrifices” rather than a fair distribution of profits and a sharing of resource wealth. Furthermore, the government’s legislative assault on trade union and collective bargaining rights since 2007 has made it clear that there is little room for redistributive policies in the New Saskatchewan.

So what of Wall’s reminder that the people of Saskatchewan are the owners of this important resource? When faced by recalcitrant mine owners and corporations that threatened a capital strike in the 1970s in opposition to increased royalties, NDP Premier Alan Blakeney responded by nationalizing over 40 percent of the industry. PCS was eventually privatized by the Saskatchewan Tories in 1989, and, under the NDP, the provincial government completely divested itself from the former Crown corporation in 1994. Today, there is little indication that the government, or the NDP in opposition, will make any moves to change the comfortable business climate that exists in the province. In the short term a low unemployment rate and demand for skilled trades will help buffer the impact of PotashCorp’s recent round of layoffs. But not unlike the travesties faced by workers at KelloggHeinz, Caterpillar, and other shuttered plants across Ontario’s struggling manufacturing belt, the real issue that needs to be addressed in Saskatchewan is the prospect for the public and co-operative ownership of wealth. When the resource boom comes to a close, the people of Saskatchewan must heed Wall’s own words and consider what is to be done with the wealth they ostensibly own.

 

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